MPF FEATURED RESOURCE THE MPF 2018 LEADERSHIP CONFERENCE KEYNOTE PRESENTATION by Patrick J. Fuller, ALM Intelligence May 3, 2018 404.885.9100 - www.theremsengroup.com
About The MPF Conference Education, community and leadership development Intimate setting, high quality participants Maximum peer interaction Input from past participants and MPF Advisory Board 2018, TheRemsenGroup 1
Brief History Began in 2002 27 leadership conferences 1,200 leaders from 925 law firms in 43 states Discover Connect Compete State of The Industry Managing Partner Forum 2018 Patrick Fuller May 3, 2018 Atlanta, GA 2018, TheRemsenGroup 2
2018, TheRemsenGroup 3
(Data: Patents filed under Legal services and handling legal documents. Source: World Intellectual Property Organization. Data to year ending 31 December 2016.) & Thomson Reuters 2018, TheRemsenGroup 4
Same Song, Different Verse? 2018, TheRemsenGroup 5
The Changing Market Pre-Downturn Era Seller s Market Current Period ASP Adoption CLOC Movement The Future of the Legal Market AI Big 4 Big Law GDP Growth Law Firm Billing Rate Growth 1994 1998 2002 2006 2010 2014 2018 2022 2026 Data Sources: ALM Intelligence; U.S. Bureau of Economic Analysis Source: When Will Disruption Hit the Legal Industry? Hugh A. Simons and Nicholas Bruch, The American Lawyer, September 11, 2017 Slowing Revenue Growth for Am Law 200 Firms 13% Pre-Downturn Downturn Post Downturn 2% Annual Revenue Growth Rates 2000 2004 2008 2012 2016 Data Source: ALM Intelligence 2018, TheRemsenGroup 6
Volatility Firms Are Facing a Period of High Volatility Percentage of Am Law 200 Seeing a Decline in a Key Metric in Last Three Years Revenue Decline Revenue Decline 61% Revenue per Lawyer (RPL) Decline Revenue Per Lawyer Decline Profit per Lawyer (PPL) Decline Profit Per Lawyer Decline 83% 85% Profit per Equity Partner (PPP) Decline Profit Per Equity Partner Decline 67% Decline in Any Key Metric Decline of Any Key Performance Metric 91% Data Source: ALM Intelligence Opportunity in MidLaw New Law VS Big Law Future of the Legal Market Rising Market Share Law Law Department Accelerating Growth Departments s ents Gaining Acceptance Emboldened Attitude Alternative Law Department Service Providers Law Legal ments s Department Tech ments s Law Department Big Law ments s Slowing Growth Volatile Financials Client Push Back Declining Role in the Legal Market 2018, TheRemsenGroup 7
Legal Market Trends Pre-Downturn Era 2017 Law Firm Market Share: 60% - 70% New Competitors: Underdeveloped Share of law firm spend Percentage of total spend 69% 61% 30% 38% <1% 1% Law Firms In-House Alternative Legal Service Providers Source: Build or Buy The Evolution of Law Department Sourcing, ALM Intelligence, 2017 Data Sources: ALM Intelligence Contrary to popular opinion domestic office openings have outpaced international openings Number of Am Law 200 offices added by region For offices opened between 2001 and 2016 Share of Am Law 200 offices added by region For offices opened between 2001 and 2016 795 346 International Offices US Offices, 70% US Offices International Offices Data Sources: ALM Intelligence 2018, TheRemsenGroup 8
Many US markets have seen a dramatic increase in the number of firms present Number of Am Law firms by metro area 200 10% 33% Percentage Increase (2001 2017) 150 100 50 49% 81% 88% 136% 78% 67% 96% 50% 118% 52% 70% 85% Firms Which Entered After 2001 Firms Which Entered Before 2001 88% 92% 120% 133% 125% 114% 0 Data Sources: ALM Intelligence Case Study: Impact of Expansion into the Houston Market Number of Am Law Firms in Houston 33 45 New Am Law Firms (+136%) 2001 2003 2005 2007 2009 2011 2013 2015 2017 Prominent Entrants in Houston Since 2001 78 1. Latham & Watkins 2. Kirkland & Ellis 3. DLA Piper 4. Sidley Austin 5. Hogan Lovells 6. Morgan, Lewis & Bockius 7. Norton Rose Fulbright 8. Greenberg Traurig 9. Simpson Thacher & Bartlett 10.Quinn Emanuel 2018, TheRemsenGroup 9
Case Study: Impact of Expansion into the Houston Market Percentage Change in Houston-based Lawyers at Leading Local Firms (2001 2017) Vinson & Elkins Norton Rose Fulbright Baker Botts Andrews Kurth Bracewell Locke Lord Edwards -13% -28% -28% -28% -27% -39% Data Sources: ALM Intelligence Fulbright & Jaworski s under performance pressured it into a questionable merger with Norton Rose Case Study: Impact of Expansion iinto the Houston Market 150% 125% 100% 75% 50% 25% 0% -25% -50% -75% Change in Number of Am Law Firms w/ Offices in Houston Lawyer Growth at Leading Local Firms Change in Market Share of Leading Local Firms 2001 2003 2005 2007 2009 2011 2013 2015 2017 131% -29% -43% Data Sources: ALM Intelligence 2018, TheRemsenGroup 10
Law Firms Waking Up Big 4 s Competitive Threat Responses from US and UK Law Firm Leaders How concerned are you about alternative legal service providers and accounting firms? Which competitors do you consider to be a major threat to your law firm s market share? 66% 19% 15% Accounting companies moving into the legal industry Expansion of in-house law departments Legal process outsourcing companies 18 % 29 % 45 % E-discovery vendors moving into a wider range of services 8% Data Sources: ALM Intelligence Source: Elephants in the Room Part I -The Big 4 s Expansion in the Legal Services Market, Nicholas Bruch and James Mayer The Future of the Legal Market: Trends Going Forward Competition: areas of intense competition are emerging Consolidation: more consolidation is enviable Clients: law department sophistication will continue to increase Technology: investments in tech will be important but as means, not an end Management: success will be determined by firms ability to execute Collaboration: collaborations across vendor types will become essential 2018, TheRemsenGroup 11
Thank You For more information please contact: Patrick Fuller Vice President, Legal Intelligence 405-285-5358 pfuller@alm.com 2018, TheRemsenGroup 12